Competition Law in Tourism

© Carlos Torres (editor), Bertold Bar-Bouyssière, Keti Zukakishvili, Sander De Volder, Dominik Wolski, Péter Staviczky, Annabelle Lepièce, Romain Papy, Luís Fonseca Almeida, Diego Benítez, Hermes Navarro del Valle, Francisca Ramón Fernández, Cristina Lull Noguera, Chiara Tincani, Michael Wukoschitz, António Osório, João Almeida Vidal, Tommaso Bonetti, Cecilia Sereni Lucarelli, Sara d’Urso, Fredy Sánchez Merino, Alejandro Corral Sastre, Margarida Rosado da Fonseca, Filipa Veiga Gomes, Ardyllis Alves Soares, Joandre Antonio Ferraz, Ana Branca Soeiro de Carvalho, Michael Tanti-Dougall, Jacqueline Tanti-Dougall, Juan Francisco Rodríguez Ayuso, Valérie Augros, Marcelo Oliveira, Andrew Charlton, Charles Stotler, Tasman Tam, Julio Facal, Sheila Sánchez Bergara, Joaquín López Vallés, Pilar Juana Garcia Saura, Raúl Pérez Guerra, María Matilde Ceballos Martín, Afonso Ribeiro Café, Competition Council of Luxembourg, Rosaria Garozzo, Marina Pecoraro, IATA. ISBN: 978-989-9066-02-1 All Rights Reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher. A written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature. This work is published for general guidance only and is not intended as a substitute for professional advice. While every precaution has been taken in the preparation of the text, the publishers and authors can accept no responsibility for the consequences of any errors, however caused. This edition was published in 2022 by ESHTE – Estoril Higher Institute for Tourism and Hotel Studies Av. Condes de Barcelona, 808 2769-510 Estoril Portugal www.tourismlaw.pt And English language review: Gonçalo Vagos Diniz Wordmaker-Transcrições – Serviços Linguísticos, Unipessoal, Lda. | JohnnyMarques Structural revision: Marta Ferreira and Tomás Torres Typeset by Gráfica 99 Printed and bound by VASP Dep. legal n.º 493595/21

Contents COMPETITION LAW – GENERAL THEMES Bertold Bar -Bouyssière, Keti Zukakishvili and Sander De Volder EU Competition Law and Policy in the Tourism Sector 25 Abstract; 1. Introduction; 2. Tourism in the EU: Mapping the Key Actors; 2.1. “Traditional” actors and EU rules applicable to them; 2.2. Online intermediaries and recent Platform-to-Business regulation; 3. Evolution of Market Definition; 3.1. Relevant product market; 3.2. Relevant geographic market; 3.3. Outlook; 4. Concentrations; 4.1. Horizontal concentrations; 4.2. Non-horizontal concentrations; 5. Anti-Competitive Agreements, Concerted Practices and Decisions; 5.1. Horizontal agreements; 5.2. Vertical agreements; 5.3. Outlook; 6. Abuse of a Dominant Position; 6.1. Pricing abuses; 6.1.1. Excessive pricing; 6.1.2. Predatory pricing; 6.1.3. Zero pricing; 6.1.4. Rebates and discriminatory pricing; 6.1.5. Geo-blocking and other geographically-based restrictions; 6.2. Non-pricing abuses; 6.2.1. Refusal to supply; 6.2.2. Predatory Innovation;

8 COMPETITION LAW IN TOURISM 6.3. Outlook; 7. State Aid; 7.1. Core elements of state aid; 7.2. Overview of the Commission’s decisional practice in the tourismsector; 7.3. Outlook; 8. Conclusion: Trends and Expectations; Bibliography. Dominik Wolski Private Antitrust Enforcement in The tourism industry 91 1. Introductory Issues; 2. Does Antitrust Law Have Something to do with the Tourism Industry?; 3. Antitrust Damages Claims in the Tourism Industry; 4. Other Consequences of Antitrust Infringements; 5. Conclusions and Recommendations; Bibliography. Péter Staviczky Tourism and State Aid 111 Abstract; 1. Introduction; 2. The Principles of State Aid Control; 2.1. What is State aid is and what it is not; 2.2. When is State aid is compatible with the internal market?; 3. The State Aid Jurisprudence Related to the Tourism Sector; 3.1. Touristic services and services of general economic interest, the SNCM case; 3.2. The judgment issued in the Dilly’s Wellnesshotel case, the interpretation of block exemptions; 3.3. The judgments in the Comitato “Venezia vuole vivere” cases; 3.4. The HGA judgment, the importance of the incentive effect; 3.5. The A&O hostel and hotel case, the Commission’s duties during the compatibility assessment; 4. Commission Decisions Related to the Tourism Sector; 5. State Aid Rules Applicable in the Tourism Sector; 6. Conclusions.

CONTENTS 9 Annabelle Lepièce How to Support the Development of New Routes at an Airport: Commercial Incentives and Compatible Aids in Favour of Airlines under EU Law 143 Introduction; 1. General Principles of State Aid; 1.1. The notion of State aid; 1.2. The procedural obligations; 1.3. The relevant EU framework in the air transport sector; 2. Incentives Granted by Airports and Public Authorities for the Development of Routes; 2.1. Commercial incentives to airlines under the private operator principle; 2.2. Non-selective rebates on airport charges; 2.3. The remuneration for publicity on an airline’s website; 2.4. The purchase of flight tickets by a public company/authority; 3. Regional Schemes to Develop Air Traffic; 4. Aids Authorised under EU Law; 4.1. Start-up aids for new routes; 4.2. Public Service Obligations in the air transport sector; 4.3. De minimis aid; 4.4. The grant of social aid; Conclusion. Romain Papy Is the Airline Industry a Natural Monopoly or a Contestable Market? The Enforcement of EU Competition Law Viewed Through the Prism of Airline Economics 173 Abstract; 1. Overview; 1.1. EU Competition Law and Economics; 1.2. The Paradox of Airline Economics; 1.3. The Control of Concentrations in the Airline Industry; 2. The Harmless Effect of Concentration Highlighted by Airline Economics; 2.1. The Theory of Contestable Markets in the Airline Industry: “Capital on Wings”; 2.2. The Benefits of Economies Of scale, Density and Scope;

10 COMPETITION LAW IN TOURISM 3. The Anti-competitive Effects of Concentration Highlighted by Airlines Economics; 3.1. The Limits of the Theory of Contestable Markets and the Remaining Issue of Barriers to Entry; 3.2. The Mutual Forbearance Hypothesis; 3.3. The Trend towards Monopoly and Oligopoly; 4. EU Competition Law Enforcement in the Light of Airlines Economics; 4.1. Potential Competition and the Theory of Contestable Markets; 4.2. Barriers to Entry and the Theory of Mutual Forbearance; 4.3. Economic Efficiencies versus Consumer Welfare; 4.4. Free Market versus EU Internal Market Integration; Conclusion; References. Luís Fonseca Almeida Existing International Civil Aviation Organization (ICAO) Policy and Guidance Material on Competition 205 1. Introduction; 2. Provisions in the Chicago Convention; 3. ICAO Assembly Resolutions; 4. Conclusions and Recommendations of Air Transport Conferences; 4.1. Competition Laws; 4.2. Cooperation in the Field of Competition; 4.3. Competition Practices; 5. ICAO Policy Guiding; 6. Summary. Diego Benítez Comparative Law Experiences: Refusal from Service Providers 217 1. Introduction; 2. E-commerce, Parity Clause & Unfair Competition; 3. Internet Intermediaries; 4. Other Examples in Comparative Tourism Law; 5. Intermediary Online Services and Consumers Protection; 6. The Argentinean Antitrust Law; 7. Final Remarks.

CONTENTS 11 Hermes Navarro del Valle Competition Law in Tourism Activities 231 1. Introduction; 2. Law 7472 on the Promotion of the Competition and the Effective Consumer’s Defense; 3. How a Claim is Presented; 4. Can a Claim Be Open Ex-Officio Or Without A Specific Damaged Party?; 5. Regarding the Necessary Existence of a Specific Damage to Present the Complaint. Francisca Ramón Fernández and Cristina Lull Noguera Practices Distorting Competition and Redressive Measures in Air Transport: About the Regulation (EU) 2019/712 of the European Parliament and of the Council 247 Introduction; I. Brief Considerations on Air Transport; II. Regulation (EU) 2019/712; III. Practices Distorting Competition; IV. Redressive Measures; Conclusions; Bibliography. Chiara Tincani Competition and Tourist Protection in the Works of the Italian Competition Authority 265 1. The Role of the Italian Competition Authority in the Italian Legal System and its recent Measures Regarding Tourism; 2. The So-Called “Large Hand Luggage Fee” Charged by Some Airlines; 3. Flight Cancellation; 4. Online Purchase of Airline orMaritime Tickets; 5. Non-Used Tickets Refund Procedure for Multi-Stop Flight Tickets. Michael Wukoschitz Competition Issues in Air Ticket Sales through Global Distribution Systems – Distribution Cost Charge and Location-Dependant Ticket Prices: Analysis of an Austrian Supreme Court Decision 283

12 COMPETITION LAW IN TOURISM António Osório Competition in Air Transport Services Within Africa Regulations – Africa Union 293 1. Introduction; 2. Definitions, Purpose, Objectives and the Scope of Application; 2.1. Definitions; 2.2. Objectives and Scope of Application; 3. Anti-competitive Practices, Agreements and Decisions; 4. Abuse of Dominant Position; 5. Non-discrimination in National and Regional Legislation and Administrative Measures; 6. Subsidies; 7. Exemptions and Safeguard Measures; 8. Enforcement, Investigation, Negotiation and Regional Competition Authorities; 9. Complaints; 9.1. Complaints; 9.2. Investigation and Procedural Fairness; 9.3. Outcome of Complaint; 9.4. Provisional Measures; 10. Cooperation with Member State Authorities and Access to Information; 11. Penalties; 12. Professional Secrecy; 13. Publication of Decisions; 14. Provisions for the Implementation of Regulations; 15. Conclusions; Bibliography. João Almeida Vidal The Proposed Introduction of Market -Based Mechanisms for the Use of Airport Slots and its Effects on Competition 307 Abstract; 1. The Use of Airport Slots as a Competition Issue; 2. The Legal Nature of Airport Slots: Property or Contractual Rights?; 3. Potential Competition Concerns in the Slot Market; 4. The Contribution of Competition Law;

CONTENTS 13 4.1. The extent to which competition law can solve possible concerns; 4.2. Design of market mechanisms; 5. Conclusions; References. Tommaso Bonetti and Cecilia Sereni Lucarelli Tourism and Competition in the Italian Legal System 321 1. Tourism in the Italian Legal System: a Premise; 2. Tourism and Protection of Competition: the Case of the Concessions of Bathing Establishments; 3. Touristic Layout and Rules in Favour of Competition: Brief Notes on the Organisational Structure; 4. Tourism Policy and Competition Dynamics in Italy: Seeking a New Centre of Gravity? Rosaria Garozzo and Marina Pecoraro Competition Protection in the Tourism Sector in Italy 333 I. Introduction; II. The Italian Regulatory Framework; a) The Italian legislation; b) The Italian system of multilevel governance; c) The regional legislation; III. ICA Decisions in the Field of Tourism; a) Advocacy activity; b) ICA Investigation: Booking and Expedia cases. Competition Council of Luxembourg Contribution of the Competition Council of Luxembourg 355 Context; 1. The Tourism Sector in Luxembourg; 2. Opinion from the Luxembourg Consumer Association; 3. Decision No. 2013-FO-04 Luxair/agence de voyages; 4. The Competition Council’s Contribution to the Online Hotel Booking Sector’s Issues.

14 COMPETITION LAW IN TOURISM Sara d’Urso The Essentiality of a Large Hand Luggage in Air Transport and Unfair Commercial Practises 359 1. Preliminary Remarks; 2. The Fact; 3. The Distinctive Features of Low-Cost Airlines; 4. The Regulation of Cabin Baggage in Air Transport and the “Essentiality of Large Hand Luggage”; 5. Unfair Commercial Practises; 6. Conclusions. Fredy Sánchez Merino Acts that May Cause Confusion and their Influence on Tourism 381 1. Introduction; 2. Confusion-Causing Acts; 2.1. General Aspects: Imitation vs. Confusion; 2.2. Imitation Acts; 2.3. Specifics of Imitation Acts; 2.4. Confusion Acts; 2.5. Enforcement Limitations; 3. (The Need for) Imitation; 4. Implications for the Tourism Sector; 4.1. Double Approach: Consumer – Competitor; 5. Possible Effects on the Tourism Sector; 6. Conclusions; 7. Bibliography. Alejandro Corral Sastre ICT as an Instrument for more Efficient Administrative Control of Tourism Activities: Towards Smart Tourism 397 Abstract; 1. Introduction; 2. Tourism in Spain: A Strategic Sector for the Economy; 3. Intelligent Tourism: Making a More Sustainable Tourism; 3.1. The development of Smart Cities as a necessary preliminary step to the development of smart tourism; 3.2. Smart tourist destinations;

CONTENTS 15 3.2.1. Big data and the reuse of tourist information; 3.2.2. The Internet of Things and connectivity; 3.2.3. Cloud computing; 3.2.4. Blockchain; 3.3. The use of ICT to reach higher levels of sustainability and tourist quality; 3.3.1. Destination’s support capacity; 3.3.2. The residents’ participation in the decision making; 3.3.3. Improvement in mobility and energy efficiency in cities; 3.3.4. Increase in the quality of tourism services and economic profitability; 4. The Main Challenges before Smart Tourism; 4.1. Data protection and privacy: the importance of privacy in the design and by default; 4.2. Inclusive technological development; 4.3. Digital tourism detox; 4.4. The collaborative economy in tourism; 5. The Control Activity of Public Administrations in the Digital Ambit; 6. Conclusion; 7. Bibliography. Margarida Rosado da Fonseca and Filipa Veiga Gomes Tourism Law and Competition – A Portuguese Perspective 417 A. Executive Summary; B. Preliminary Remarks; B.1. The scope of “tourism” activities; B.2. The importance of tourism for Portugal; C. Competition and Tourism – Context; C.1. From the perspective of the European Union; C.2. Under Portuguese law; D. Competition Advocacy and Enforcement prior to COVID -19; D.1. Merger control; D.2. Other areas of competition law and enforcement; E. The Paradigm Shift with the Outbreak of COVID -19; E.1. Tourism during the COVID -19 outbreak; E.2. State support for tourism and state aid; E.2.1. Support at EU level; E.2.2. The importance of State aid;

16 COMPETITION LAW IN TOURISM F. Portuguese Response to COVID -19 with Impact in Tourism; F.1. Preliminary remarks; F.2. Highlights on State Aid measures; F.2.1. Under the temporary framework; F.2.1.1. First aid scheme applicable to the national territory; F.2.1.2. Second aid scheme applicable to the national territory; F.2.1.3. Third aid scheme applicable to the national territory; F.2.1.4. Notification of aid scheme for undertakings in Azores; F.2.1.5. Notification of aid scheme for undertakings in Madeira; F.2.2. Under de minimis Regulation; F.2.3. Under the General Block Exemption Regulation; F.2.4. Under the Guidelines on Rescue and Restructuring and article 107(2)(b) TFEU; F.2.4.1. Aid scheme in favour of TAP; F.2.4.2. Aid scheme in favour of SATA; F.2.5. The creation of a new national promotion bank; F.3. The CA’s advocacy efforts given the exceptionality of times; F.4. Possible relevant topics in merger control; F.5. Recovery measures; G. Final Remarks. Ardyllis Alves Soares The European Union and European States’ Developments on Online Travel Agencies’ Parity Clauses 483 Introduction; 1. European Union; 2. Germany; 3. France; 4. Italy; 5. Austria; 6. Belgium; 7. Switzerland; 8. Sweden; 9. Denmark; Final Remarks; References.

CONTENTS 17 Joandre Antonio Ferraz Hotels x Online Travel Agencies – Brazil’s Competitive Authority Decision 497 I. Forum of Brazilian Hotel Operators (FOHB); II. Online Travel Agencies (OTAs); III. Administrative Council for Economic Defense (CADE); IV. Representation; V. CADE’s Report; V.1. The OTA Market and Alleged Practices; VI. The OTAs Commitment Proposals; VII. CADE’s Analysis; VII.1. The Convenience and Opportunity of Proposals; VII.2. Failure to Comply with TCC and Applicable Penalties; VIII. CADE’s Conclusion; Annex. Ana Branca Soeiro de Carvalho Parity Clauses and the European Competition Law in Tourism – The “Most -Favoured -Nation Clauses” (MFNs) and the Online Travel Agencies (OTAs) 483 515 1. Competition Law and Online Services; 2. Parity Clauses and Competition; 3. The Most-Favoured-Nation Clauses (MFNs); 4. OTAs and Parity Clauses Online; 5. Price Comparison Websites (PCWs); 6. Competition Law by National Competition Authorities; References. Michael Tanti-Dougall and Jacqueline Tanti-Dougall Travel Agents versus Airlines in the Maltese Competition Law Scenario: On PSAA’s jurisdiction and IATA’s Juridical Interest in connection with the Reduction of the Travel Agents’ Commission 529 1. Introduction; 2. Facts of the Cases; 3. Filing of Judicial Cases by FATTA in the Civil Court; 4. IATA’s Plea that it Should Not Be Part of the Proceedings; 5. The Four Airlines’ Defence Pleas;

18 COMPETITION LAW IN TOURISM 6. One Economic Unit; 7. Decision by the Civil Court; 8. Jurisdiction; 9. The Decision Concerning the Preliminary Pleas Raised by IATA; 10. The Decision about the Breach of Articles 5 and 9 of the Competition Act; 11. Lufthansa and the Abuse of a Dominant Position; 12. Conclusion. Juan Francisco Rodríguez Ayuso Electronic Arbitration as a Means of Resolving Tourist Disputes 545 Abstract; 1. Introduction; 1.1. Times of Technology: the Information Society and Electronic Commerce; 2.1. ADR and ODR Dispute Resolution Systems. Character Identification; 3. Legal Framework for Alternative Consumer Dispute Resolution Procedures, in Particular, Arbitration: Regulation and Characteristics; 3.1. European Rules of Origin; 3.2. Spanish Legal Order; 4. E-Arbitration of Tourist Consumption. NEW DISTRIBUTION CAPABILITY (NDC) Valerie Augros IATA’s New Distribution Capability (NDC) in Light of European Competition Principles 561 Abstract; I. Competition Awareness in CRS/GDS Development; I.1. Historical Evolution of Air Tickets Distribution; I.2. Specific European Competition Measures in Ticket Distribution; I.2.1. Exemption decisions; I.2.2. Codes of conduct; II. NDC from the Standpoint of EU Competition Rules; II.1. Reasons for the recent change of emphasis in air ticket distribution;

CONTENTS 19 II.2. The IATA Resolution 787; II.3. Analysis of NDC through European Principles on Competition; II.4. The GDS Surcharge Practice: a Dominance to be Prohibited?; III. Final Remarks. Marcelo Oliveira A Global and Legal Overview of Travel Agent Representatives Regarding the NDC Created by IATA 573 Abstract; 1. Introduction; 2. Development; 2.1. What is the NDC?; 2.2. The Standardisation of the NDC in the Travel Industry; 2.3. Does the NDC Help Travel Agencies?; 2.4. The Position of the Main Associations Representing Travel Agencies Worldwide; 3. The Law of Defence of the Brazilian Competition; 4. Conclusion; 5. Bibliography. Andrew Charlton and Charles Stotler New Distribution Capability and Competition 589 Abstract; 1. Airline ticket distribution and new distribution capabilities; 2. Competition laws and air transport; 2.1. The situation in the USA; 2.2. The situation in Europe; 3. Regulation of CRSs in the US and Europe; 4. NDC and competition law; 5. Quo vadis? Tasman Tam New Distribution Capability (NDC): Debunking the Myths of Anti-competitive Harm 605 1. Introduction; 2. First theory: NDC, as standardisation, constitutes anti-competitive collusion;

20 COMPETITION LAW IN TOURISM 3. Second theory: restriction of price competition over airfares; 4. Third theory: excluding GDS at the wholesale/distribution level; 5. Conclusion. Julio Facal Tourism and Competition – The New Air Transport Distribution Channels: GDS vs. NDC 615 I. Tourism and the Right to Competition; II. Competition and Consumption; III. Rules on Competition and Airfare Distribution Systems: GDS vs NDC; III.1. Characteristics of the GDS Model; III.2. Characteristics of the NDC; III.3. Recent Legal Actions Filed Against GDSs / Travelport / Sabre / Amadeus by a Group of Consumers in the USA; IV. Conclusions; References. IATA The New Distribution Capability (NDC) is a Major Transformation of Airline Distribution 623 Introduction: The NDC is a Major Transformation of Airline Distribution; 2. Background: Airline Distribution; 3. Background for NDC; 3.1. Consumers are changing and have new expectations; 3.2. Airlines are modernising their IT environment; 3.3. Travel agencies are also investing in new IT while their business becomes more complex; 3.4. Corporate buyers have a strong influence, as they want to purchase air content efficiently; 4. NDC, How Does It Work?; 4.1. The NDC flow is different from a traditional GDS process because the airline creates the offer; 4.2. The technology intermediary is called Aggregator; 4.3. The payment flow is impacted by NDC; 5. Deep Dive into NDC Value Proposition;

CONTENTS 21 5.1. The NDC value proposition for airlines; 5.2. The NDC value proposition for travel agencies; 5.3. To summarise revenue and cost drivers in a nutshell; 6. Deep Dive into NDC Technology; 6.1 NDC Platform overview: introducing “Offer and Order Management” notions; 6.2. NDC standard makes it possible to move towards dynamic pricing and personalisation; 7. Industry Adoption Status; 7.1. There is a large engagement across all the value chain to adopt NDC; 7.2. Enlarging the scope: NDC is a starting point for the transformation journey, 7.3. Implementing NDC is a large-scale project; 8. Conclusion. HOUSING RENTALS Sheila Sánchez Bergara Tourist Rentals Mediated by Platforms and Competition Law: Critical Issues 639 I. Introduction; II. Controversial Issues in Regulation; III. The Main Legal Approaches; IV. Empirical Responses; V. Short-Term Rentals through Platforms and Unfair Competition; VI. References. Pilar Juana Garcia Saura Impact on the free competition in the regulations of the Collaborative hosting in Spain. Legal problems 651 1. Introduction; 2. Position of the jurisprudence on laws and regulations that govern collaborative hosting activities; 2.1. Legal nature of collaborative hosting; 2.2. Applicability in urban planning instruments approved by the different city councils of Directive 2006 on services in the internal market;

22 COMPETITION LAW IN TOURISM 2.3. Possibility of assigning the rooms of a VUT separately or completely; 2.4. Temporary limitations contained in decrees; 3. Administrative regulation implies restrictions, obligations and controls. How are they justified?; 3.1. Protection of consumers and users or minimum quality in the provision of services; 3.2. Alleging the right to housing to justify the need for administrative regulation; 4. Conclusion; Bibliography. Raúl Pérez Guerra and Maria Matilde Ceballos Martin Towards a Regulation or a Deregulation of Tourist Apartments in Spain: With Particular Reference to the Autonomous Community of Andalusia 663 Abstract; I. Towards the Configuration of a New Accommodation Modality; I.1. Consideration of tourist apartments: a legal necessity; I.2. Tourist accommodation in the regional planning; II. Private Housing for Touristic Purpose in Andalusia; III. Conclusion; IV. References. Afonso Ribeiro Café Competition Challenges in the Accommodation Sharing Economy in Portugal 681 1. Notion of the Sharing Economy; 2. Sharing Tourism and Accommodation; 3. Are There Competition Issues in Sharing Accommodation?; 3.1. Is there any violation of par conductio concurrencium principle? The Portuguese case; 3.2. Barriers in national law to reaching an effective competition; 4. Portuguese Alojamento Local Law.

CONTENTS 23 Joaquín López Valles Regulation of Short-Term Housing Rentals in Spain: A Critical Review under Competition and Efficient Economic Regulation Standards 693 Abstract; 1. Introduction; 2. Regulation of Short-Term Housing Rentals in Spain; 2.1. The First Regulatory Wave (2013-2017); 2.2. The Second Regulatory Wave (20172018); 3. Critical Assessment of the Regulation; 3.1. Legal Framework; 3.2. The Cost of Restrictiveness; 3.3. The CNMC’s Advocacy; 3.4. Some Insights; 4. Conclusions; CASE LAW Carlos Torres State Aids to Airlines due to COVID-19 and Ryanair’s Actions before the European Court of Justice 709 Abstract; 1. Introduction; 2. The general principle that State aid is incompatible with the internal market; 3. Member States must notify the Commission before granting aid; 4. State aid to airlines related to the COVID-19 pandemic; 4.1. France: airport taxes; 4.2. Danish State aid to SAS; 4.3. Swedish State aid to SAS; 4.4. Finnish State aid to Finnair; 4.4.1. Infringement of Article 107(3)(B) TFEU; 4.4.2. Breach of the principles of non-discrimination, freedom to provide services and freedom of establishment; 4.4.3. Infringement of Article 108(2) TFEU; 4.4.4. Breach of the obligation to state reasons; 4.5. Portuguese State aid to TAP.

EU Competition Law and Policy in the Tourism Sector In exactly the same manner as the artist feels an invincible desire to paint, and the poet to give free course to his thoughts, so I was hurried away with an unconquerable wish to see the world.1 Bertold Bär-Bouyssière2 Keti Zukakishvili3 Sander De Volder4 Abstract; 1. Introduction; 2. Tourism in the EU: Mapping the Key Actors; 2.1. “Traditional” actors and EU rules applicable to them; 2.2. Online intermediaries and recent Platform-to-Business regulation; 3. Evolution of Market Definition; 3.1. Relevant product market; 3.2. Relevant geographic market; 3.3. Outlook; 4. Concentrations; 4.1. Horizontal concentrations; 4.2. Non-horizontal concentrations; 5. Anti-Competitive Agreements, Concerted Practices and Decisions; 5.1. Horizontal agreements; 5.2. Vertical agreements; 5.3. Outlook; 6. Abuse of a Dominant Position; 6.1. Pricing abuses; 6.1.1. Excessive pricing; 6.1.2. Predatory pricing; 6.1.3. Zero pricing; 6.1.4. Rebates and discriminatory pricing; 6.1.5. Geo- -blocking and other geographically-based restrictions; 6.2. Non-pricing abuses; 6.2.1. Refusal to supply; 6.2.2. Predatory Innovation; 6.3. Outlook; 7. State Aid; 7.1. Core elements of state aid; 7.2. Overview of the Commission’s decisional practice in the tourismsector; 7.3. Outlook; 8. Conclusion:Trends andExpectations; Bibliography. 1 Ida Pfeiffer, A Woman’s Journey Round the World, Library of Alexandria, 1852. 2 Dr. Bertold Bär-Bouyssière, LLM, is one of the leading practitioners of competition law in Brussels and Germany. Bertold has more than 25 years of experience in the field. A partner with DLA Piper’s Brussels and German offices, Bertold is a Fulbright alumnus and admitted to the New York, German and Brussels bars. Bertold currently heads the EU Competition team in Brussels and also has responsibilities as Elected Member of DLA Piper’s International Board. Since 2017, Bertold serves as ElectedCo-Chair of AmChamEU’s Competition Policy Committee. 3 Keti Zukakishvili is a LLM graduate from the College of Europe in Bruges, currently working as Legal Advisor at DLA Piper’s Litigation and Regulatory team in Brussels. During her work as Academic Assistant at the European Legal Studies department of the College of Europe, Keti has co-authored and co-edited “Georgian Competition Law” – the first modern antitrust textbook in Georgian language. Keti has also completed traineeships at the Legal Service of the European Commission and the Competition Division of the OECD. 4 Sander De Volder is a Master of Laws graduate (2019, Ghent University, Belgium) who interned at DLA Piper’s Brussels office under the supervision of Bertold in July 2019. Sander is currently pursuing a bilingual (French and English) LLM in European Competition and Intellectual Property Law at the University of Liège (Belgium).

26 COMPETITION LAW IN TOURISM Abstract The application of the European Union competition law in the tourism sector is a vast subject, comprising several regulated and non-regulated markets, all in constant evolution. The rules on the anticompetitive agreements, the abuse of the dominant position, the control of concentrations and state aid do not single out tourism. General trends, underpinning competition policy affect this fastgrowing sector as well. During the next five years, considerations of the block’s global competitiveness, challenges of digitalisation and increased focus on sustainability will likely dominate the competition discourse. The role of regulation, pertinent to both online and offline tourism services, is also likely to grow. While COVID-19 has disrupted the sector, competition law will continue to apply with only a few modifications in legal standards and policy priorities. Keywords: European Union; Competition Law; Competition Policy; Tourism; Antitrust; Mergers; State Aid; Digitalisation; Online Travel Agents; Parity Clauses; Competitiveness; Sustainability. 1. INTRODUCTION Tourism has been and will remain a heavy-weight of the European Union (EU) economy, comprising multiple sub-sectors, all subject to the application of the EU competition legislation. For decades, the rules on the prohibition of anti-competitive agreements, the abuse of dominant position, the control of concentrations and state aid have been applied without hindrance in tourism markets. Recently, disruptive innovation has created waves across the block and affected both: the competition policy and the tourism industry. Even more recently, the Coronavirus has dealt an unprecedented and unexpectedly heavy blow to the industry. The authors remain confident that by the time these lines are published, this challenge will be overcome. While it will take the sector time to recover, the economic difficulties will not lead to a relaxation of antitrust standards, all the more as the services provided, unlike certain health products, cannot be considered “essential” to respond to the health crisis. Certain mergers will pass with the help of the “failing firm defence”, and the availability of State aid will depend on the generosity of the Member State. As to antitrust, history shows that a crisis leads to crisis cartels. They may be cartels “out of need, not greed”, but they remain cartels. Fines will be high.

EU COMPETITION LAW AND POLICY IN THE TOURISM SECTOR 27 A more detailed overview of the impact of COVID-19 on the tourism sector can be found in the text and presentation of the author on the subject in the context of the international web conference organised by Professor Carlos Torres5 in April 2020. With a record of 1.4 billion international arrivals in 2018, global tourism grew around 4% in the first semester of 20196. Steadily expanding over the decades, the industry has achieved a 56 fold increase since 19507 and shows no sign of stopping8. In a fierce global competition, the EU takes the lead and collects 33% of global tourism receipts9. At the same time, the sum of direct and indirect contributions from the sector reaches 10.3% of the EU GDP, and the full-spectrum of tourismrelated activities employs around 27 million Europeans10. Hence, unsurprisingly, tourism has attracted considerable attention of the EU policy-makers since the early days of the Union11. Even the French satirical newspaper “Canard enchainé” published a Special on tourism in summer 201912. “Tourism” first appeared in the EU primary legislation in 1992, when the Treaty of Maastricht introduced it as a measure, subsidiary to the Member States’ policies13. The EU institutions have come up with various initiatives to 5 Bertold Bär-Bouyssière, The Impact of COVID-19 on Competition Law and Policy in the Tourism Sector, http:// intranet.eshte.pt/LegalImpactsCoronavirus11/. 6 UNWTO, International tourism up 4% in first half of 2019, World Tourism Organization reports, 09.09.2019, available at: http://www2.unwto.org/press-release/2019-09-09/international-tourism-4-first-half-2019-world-tourism -organization-reports. 7 Max Roser, Tourism, available at: https://ourworldindata.org/tourism. 8 UNWTO, International tourism continues to outpace the global economy,, available at: https://www.e-unwto. org/doi/pdf/10.18111/9789284421152. 9 According to UNWTO, with 710 million tourists spending circa EUR 483 billion, Europe remains the most visited region; Numbers for the EU-28: 562.9 million visitors in 2018, spending circa EUR 407 billion. See, UNTWO, supra note 8, p. 17. 10 European Parliament, Fact Sheets on the European Union – Tourism, available at: https://www.europarl. europa.eu/factsheets/en/sheet/126/tourism. 11 Tourism (in the context of regional policy) was discussed already in the First General Report on the Activities of the Communities in 1967, available at: https://publications.europa.eu/en/publication-detail/-/publication/ efe33680-e3c7-4f53-8de7-98733c6965a2; “Article 2 of the Treaty of Rome assigns to the European Community the task of promoting closer relations between the States which belong to it. Tourism can assist the Community to achieve this goal and, by cringing the peoples of Europe into contact, it buttresses the edifice of European integration” – asserted the 1982 Communication of the Commission on Community Tourism policy. 12 Les dossiers du Canard n° 152: “1,4 milliard de touristes! et moi, et moi, et moi …” (July 2019). 13 Article 3 of the Treaty of Maastricht.

28 COMPETITION LAW IN TOURISM stimulate “genuine integrating force”14 and “quality and competitiveness”15 of European tourism. The EU-level action emphasised its growth and employment while taking into account sustainability16 considerations, the latter becoming more and more prominent over the years17. The Lisbon Treaty confirmed heightened focus on the sector’s competitiveness18: labelled as “the world’s number 1 tourist destination”19, the EU aims to keep that leadership20, but the pressure is high. Travel habits evolve and less explored destinations penetrate the travellers’ bucket lists. Whereas in 1950, two-thirds of tourists arrived in Europe21, almost seven decades later, this ratio decreased substantially. Tourism in emerging economy destinations is projected to grow twice as fast, compared to advanced tourism economies22. Technological solutions changing the nature of traditional tourism are mainly developed outside the EU, and even space tourism, expected to scale-up in coming years, is dominated by non-European companies23. Digitalisation, as a powerful global trend, has been recognised as one of the key factors affecting the EU’s economy in general24, and the tourism 14 See, e.g., European Commission’s press release upon declaration of 1990 as “the European Year of Tourism”, available at: https://europa.eu/rapid/press-release_IP-89-891_en.htm. 15 See, e.g., EC press release concerning the First Multiannual Programme to assist European Tourism (1997- -2000) – “Philoxenia Program”, available at: https://europa.eu/rapid/press-release_IP-96-366_en.htm; See also: the “Action plan of tourism for 1993-1995” (Council, 1992); the Commission Green Paper “On the role of the Union on tourism” (EC, 1995); European Council of 21 June 1999 on the topic of “Tourism and employment”; EC Communication “Working together for the future of European tourism” (COM(2001) 0665). 16 Sustainable tourism is defined by UNWTO as “Tourism that takes full account of its current and future economic, social and environmental impacts, addressing the needs of visitors, the industry, the environment and host communities” (http://www2.unwto.org/content/about-us-5). 17 The Communication from the Commission on “Agenda for a sustainable and competitive European tourism” (2007); European Framework for Action on Cultural Heritage (2018). 18 Article 195 TFEU: “The Union shall complement the action of the Member States in the tourism sector, in particular by promoting the competitiveness of Union undertakings in that sector” (emphasis added). 19 The Communication from the Commission on “Europe, the world’s No 1 tourist destination – a new political framework for tourism in Europe” (2010). 20 See, e.g., European Commission: Tourism, available at: https://ec.europa.eu/growth/sectors/tourism_en. 21 Max Roser, Tourism, supra note 7. 22 OECD, Tourism Trends and Policies 2018, available at: https://www.oecd-ilibrary.org/docserver/tour-2018- -en.pdf?expires=1570444094&id=id&accname=guest&checksum=FE33D0387BFB664B7E80B6A07F51F279. 23 See, e.g., Jonathan O’Callaghan, 2019 is the year that space tourism finally becomes a reality. No, really, 24.01.2019, https://www.wired.co.uk/article/spacex-blue-origin-space-tourism; Space Tourism: 5 Space Companies That Will Make You An Astronaut, available at: https://www.revfine.com/space-tourism/. 24 MLEX: Europe’s EUR9.2 billion digital budget plans for 2021-2027 get parliament’s approval, 18.04.2019, available at: https://www.mlex.com/GlobalAntitrust/DetailView.aspx?cid=1084512&siteid=190&rdir=1.

EU COMPETITION LAW AND POLICY IN THE TOURISM SECTOR 29 sector, in particular25. It is against this complex background that our analysis revolves. Legally speaking, finding EU-level solutions to tourism-related issues is not straightforward, considering the EU competences in this field are limited to support, coordinate and supplement the actions of the Member States26. At the same time, being transversal in nature, tourism cuts through a number of policies with variable degrees of EU competence (internal market, including digital single market, transport, consumer protection, culture, etc.) and affects many (and differently regulated) economic activities and sub-sectors (air and land transport, hospitality sector, traditional tour operators and, more recently, online platforms). If the EU is to maintain its superiority in tourism, consolidation of efforts across policies will be necessary. For better or worse, competition, as the EU’s exclusive competence, is often central in the block’s efforts to materialise its broader ambitions. Competition law, as it stands, focuses on maximising consumer welfare and does not necessarily give regard to global competitiveness or non-economic considerations27; neither does it single out tourism as a specific sector. Therefore, the Treaty rules have been applied invariably to a large pool of tourism related actors over the years28. For greater clarity, we will first provide an overview of those different actors and the recent changes in the regulatory landscape, affecting their operation. Subsequently, the key competition law topics and the pertinent cases will be discussed. On the policy side, without engaging in the broader industrial vs competition policy debate, we observe that the EU competition policy is (expected to be) influenced by overarching political priorities. Suffice it to say that upon her recent reappointment, the EU Competition Commissioner, Margrethe Vestager was explicitly asked to “contribute to a strong European industry at home and in 25 Alongside with sustainability and workforce skills, digitalisation has been named as one of the main instigators of challenges and opportunities in the EU tourism sector. See: Conclusions of the Council of the EU: “The competitiveness of the tourism sector as a driver for sustainable growth, jobs and social cohesion in the EU for the next decade” (27.05.2019), available at: https://www.consilium.europa.eu/media/39512/st09707-en19.pdf Digital transformation of EU tourism has also been a priority for the Commission’s actions in the tourism field; see: https://ec.europa.eu/growth/sectors/tourism/support-business/digital_en. 26 Article 6 TFEU. 27 At the same time, innovation, as one of the main objectives of competition law, is taking a centre stage. 28 For example, competition in the transport sector has been on the agenda as early as 1958. See: Seventh general report on the activities of the Community, para. 102 (https://publications.europa.eu/en/publication- -detail/-/publication/48238140-ab59-4840-abcc-4d2765fd0ec8); Tourism development has been invoked as a justification for state aid at least since 1976; see: European Commission, VI Report on competition policy (https:// ec.europa.eu/competition/publications/annual_report/ar_1976_en.pdf ).

30 COMPETITION LAW IN TOURISM the world”29. Besides, sustainability has been elevated to the core of the new Commission agenda, and every Commissioner will have to integrate it within their policy areas30 – competition will be no exception31, although this development raises many practical questions32. Finally, in the coming years, the EU will be “striving for digital leadership”33, which should happen under the leadership of Ms. Vestager, designated as the Commission’s Executive Vice-President for a Europe fit for the Digital Age. This view is supported by the European Council34. These overarching developments will affect competition policy, which, in turn, will have a spill-over effect on the law-enforcement process, including in the tourism sector. The main question is how and that will be discussed, to the extent possible, throughout this contribution. 2. TOURISM IN THE EU: MAPPING THE KEY ACTORS Full tourist experience involves travelling to and from and staying at the destination35, preceded by the preliminary step of booking the desired travel option. Various actors provide tourism services separately, or in an integrated way, offering “one-stop shop” to their customers. The industry, long dominated by traditional actors, has undergone remarkable changes in the last decade. Digitalisation has altered both tourism supply and demand, undermining the market power of certain incumbents while generating new ones. In order to 29 Ursula von der Leyen, President-elect of the European Commission – Mission Letter to Margrethe Vestager (10.09.2019), available at: https://ec.europa.eu/commission/sites/beta-political/files/mission-letter-margrethe-vestager_ 2019_en.pdf. 30 Ibid. p. 2. Sustainability is a priority for the Council as well (see, e.g. Finland’s Presidency Programme Presidency of the Council of the European Union 1 July – 31 December 2019, “Sustainable Europe – Sustainable Future”. 31 The European Parliament goes so far as to explicitly urge the Commission “to allow exemptions from competition rules to facilitate cooperation, both horizontally and vertically, in the context of sustainability initiatives”; see: European Parliament resolution of 31 January 2019 on the Annual Report on Competition Policy (2018/2102(INI), point 78, available at: https://www.europarl.europa.eu/doceo/document/TA-8-2019-0062_ EN.pdf ). 32 See, e.g., Simon Holmes, Climate Change, Sustainability and Competition Law, https://www.law.ox.ac.uk/ sites/files/oxlaw/simon_holmes.pdf; Thomas Lubbig, Sustainable Development and Competition Policy, Journal of European Competition Law & Practice, 2013, Vol. 4, No. 1. 33 Mission Letter to Margrethe Vestager, supra note 29, p. 4. 34 Namely, the European Council supports “updating our European competition framework to new technological and global market developments”; see: European Council Conclusions, 20.06.2019, available at: https://www.consilium.europa.eu/media/39922/20-21-euco-final-conclusions-en.pdf. 35 OECD, Glossary of Statistical Terms, https://stats.oecd.org/glossary/detail.asp?ID=2725.

EU COMPETITION LAW AND POLICY IN THE TOURISM SECTOR 31 respond to changing realities, the EU legislator has recently intervened to regulate both traditional and digital travel services. These developments also affect a competition law and policy. 2.1. “Traditional” actors and EU rules applicable to them There is no EU-wide definition of “tourism”. “Travel service” is a broad concept and covers carriage of passengers, non-residential accommodation, car rental and any other tourist service not falling under the three preceding points36. The travel industry value chain comprises travel suppliers (e.g. airlines and rail companies, hotel operators, car rental companies, etc.), tour operators and travel agencies37. Hotels and similar structures form the core of tourism services, being defined as “hotels; motels; holiday villages; tourist/service apartments; boarding houses; seasonal residential hotels; bed-and-breakfast establishments run as a business; health farms; and any other tourist accommodation structures with similar features to one or more of the preceding categories”38. With more than 3.1 billion nights spent in tourist accommodation establishments in the EU39, the sub-sector is subject to continuous growth. Furthermore, the emergence of online intermediaries for accommodation booking has altered the competitive landscape in the sector40. Despite the growing speculation regarding the upcoming EU-wide regulation of such intermediaries, concrete initiatives have not been tabled yet. Tour operators are wholesalers, mainly offering package41 holidays, whereby multiple travel services are combined. They develop tourism products by 36 Directive (EU) 2015/2302 of the European Parliament and of the Council of 25 November 2015 on package travel and linked travel arrangements, 90/314/EEC OJ L 326, 11.12.2015, pp. 1-33, Article 3(1); hereinafter: “the Package Travel Directive”. 37 Case M.8046 – TUI/Transat France, 20.10.2016, para. 8. 38 Case T-219/13, Pietro Ferracci v European Commission, judgment of the General Court of 15 September 2016, ECLI:EU:T:2016:485. 39 Eurostat, Number of nights spent in the EU up by 2% in 2018, 23.01.2019, available at: https://ec.europa.eu/ eurostat/documents/2995521/9516057/4-23012019-AP-EN.pdf/336716b1-18e5-4250-a102-3b8102bac792. 40 OECD (2018, supra note 22) suggests that players such as AirBnB or HomeAway, contributed to private accommodation becoming more accessible for tourism and exerting competitive pressure on hotels. In response, large hotel chains consider further increases in investment in their brands, loyalty programs and advertising on search engines; see: European Commission, Report on The Monitoring Exercise Carried out in the Online Hotel Booking Sector by EU Competition Authorities in 2016 (hereinafter: “EC Online Hotel Booking Monitoring Report”), available at: https://ec.europa.eu/competition/ecn/hotel_monitoring_report_en.pdf, p. 22. 41 For EU legislation purposes, “package” refers to “a combination of at least two different types of travel services for the purpose of the same trip or holiday”; see: the Package Travel Directive, Article 3(2).

32 COMPETITION LAW IN TOURISM purchasing individual travel components from travel suppliers and combining them into a package42. Tour operators generally act as a “principal” in relation to travel agents. They may also follow an integrated business model which allows them to offer upstream and downstream services, making them independent of third parties in that regard. Besides large institutional players, smaller (and often local) independent tour operators also take up an important segment of the sector, being, however, particularly vulnerable, given that they do not profit from economies of scale. Considering their competitive disadvantages, they have a weaker position in the market for distribution of travel services. Nonetheless, they also try to consolidate their image and influence, for example, through professional associations43. Travel agencies generally act as an agent of a tour operator, distributing travel services to end-customers44. In that regard, they can be considered as retailers for travel services. For each sold product, they are paid a commission by their tour operator principal. Nevertheless, travel agencies can supply other products, such as accommodation bookings, car rental, insurance, etc. They operate mainly through high street shops or office premises, but also by phone. As mentioned above, this does not rule out the possibility of tour operators offering their own products to consumers through various ways, including through their own outlets, telephone call centres and online activities. As “organisers” and “retailers”45 of package trips, tour operators and travel agencies are subject to a stringent consumer protection legislation – the Package Travel Directive, applicable across the EU since 2018. The recent insolvency of Thomas Cook46, one of the oldest and largest travel groups, is set to test the effectiveness of those rules. At the same time, the more general EU consumer protection legislation47 continues to apply to individual travel arrangements, as well as package trips, to the extent that they are not covered by the Package Travel Directive. 42 Case M.8046 – TUI/Transat France, para. 8. 43 E.g. AITO – the Association of Independent Tour Operators, https://www.aito.com/why-aito/about-aito. 44 Case M.8046 – TUI/Transat France, para. 8. 45 I.e. “a trader who combines and sells or offers for sale packages, either directly or through another trader or together with another trader, or the trader who transmits the traveller’s data to another trader”; see: Package Travel Directive, Article 3(8) and (9). 46 BBC: Thomas Cook: What went wrong at the holiday firm? 23.09.2019, https://www.bbc.com/news/ business-46452374; See also: Timo Kotowski, Die Neuordnung der Urlaubswelt, 13.10.2019, https://www.faz.net/ aktuell/wirtschaft/unternehmen/die-neuordnung-der-urlaubswelt-16431089.html. 47 Such as Unfair Commercial Practices Directive (2005) or Directive on consumer rights (2011).

EU COMPETITION LAW AND POLICY IN THE TOURISM SECTOR 33 Airlines and land transport companies are also large players in the tourism industry. According to the Eurostat, although EU residents travel predominantly by motor vehicles (64%), 17% and 11% of their trips are carried out by airplanes and trains, respectively, while buses (6%) and water vessels (2%) have more modest shares48. Admittedly, “tourism is an economic sector connected, at least in part, to the [air] transport sector”49; however, transport represents a separate EU policy, covered by a large number of sector-specific legislation50 and case-law, a subject we will only passingly touch upon. 2.2. Online intermediaries and recent Platform-to-Business regulation In the digital era, online travel intermediation is becoming more prominent. Apart from travel service providers (such as airlines, hotel operators, car rental companies or other transport service suppliers) operating through online means themselves51, two-or multi-sided platforms, acting as a medium, are growing fast. On the one hand, one of the reasons for their popularity is that indirect network effects allow suppliers to reach a more substantial number of potential consumers resulting in higher demand. On the other hand, consumers have access to more suppliers and, thus, a wider range of products52. This evolution inevitably affects the traditional supply of travel services by brick and mortar shops. Online Travel Agents (OTAs), i.e. online retailers supply “final tourist services through the commercial promotion on their website of various offers available in the market, enabling customers to access a wide range of services (hotel rooms, airline tickets, package tours, etc.) via a unique platform”53. OTAs provide, on the one hand, search, compare and booking services to consumers and, on the 48 Eurostat, Three quarters of all trips by EU residents are within their own country, 27.06.2019; available at: https://ec.europa.eu/eurostat/documents/2995521/9861197/4-27062019-AP-EN.pdf/d90fb535-6574-4a67- -bf83-37751aa92a2d. 49 Joined cases T-371/94 and T-394/94, British Airways plc and others v Commission, Judgment of the Court of First Instance of 25 June 1998, ECLI:EU:T:1998:140, para. 227. 50 For example, on a positive note, the new EU regulation on safeguarding fair competition in international air transport aims to enable fair competition between EU and non-EU carriers and aims at guaranteeing a level playing field. See: Regulation (EU) 2019/712 of the European Parliament and of the Council of 17 April 2019 on safeguarding competition in air transport, and repealing Regulation (EC) No 868/2004 PE/77/2018/REV/1 OJ L 123, 10.05.2019, p. 4-17. 51 Case M. 8416 – Priceline/Momondo, 17.07.2017, para. 17. 52 Frisco Bostoen, Most Favoured Nation Clauses – Towards an Assessment Framework under EU Competition Law, CoRe 2017, Vol. 1(3), available at: https://doi.org/10.21552/core/2017/3/9, p. 225. 53 Margherita Colangelo, Parity Clauses and Competition Law in Digital Marketplaces: The Case of Online Hotel Booking, Journal of European Competition Law & Practice, Volume 8, Issue 1, 1 January 2017, pp. 3-14, https:// doi-org.coleurope.idm.oclc.org/10.1093/jeclap/lpw046, p. 7.

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